Kansas state budget crisis largely self-inflicted

Kansas Policy Institute commentary

What should citizens do when they feel that local news media is not covering issues as they should be covered? You could do as I did, starting Voice For Liberty in Wichita. Others start think tanks like the Kansas Policy Institute and its featured projects Kansas Watchdog and Kansas Reporter.

Now the Kansas Policy Institute has placed some of its research into our state’s largest newspaper by way of paying for advertisements. Following is the text of an an to appear on Sunday. The ad as it will appear is available at State Budget Crisis Largely Self-Inflicted.

More information about the data presented in the research is available at KansasOpenGov.org’s data warehouse and KPI’s data warehouse.

Following is the text of the commentary. The chart doesn’t appear — click on the ad for that.

State Budget Crisis Largely Self-Inflicted
Tax Increases and Service Cuts Not Necessary

Declining revenues have forced dramatic changes in the state budget and prompted calls for tax increases. The revenue declines may be recession-driven but the budget crisis is largely self-inflicted. Recessions are not a matter of ‘if’ but ‘when’ and their inevitable appearance should be part of every government financial plan.

Responsible budgeting prepares for periodic revenue declines by setting money aside in good years. When downturns in the economy cause revenue declines, you can draw down some reserves to weather the storm without having to dramatically cut services or prolong the recession with tax increases. Crisis is avoided by prudent financial planning.

Crisis is invited, however, when you allow expenses to grow faster than your income and that is exactly what the State of Kansas has done over four of the last five years.

Even though total State General Fund (SGF) revenues declined the last two years, FY 2009 SGF revenues were still 23.7% higher than five years prior. Spending, however, was 40.5% higher.

Imagine how different things would be today if state government had kept spending in check. In fact, had we limited spending to 4.5% annual increases (well above inflation) we would have finished FY 2009 with a $3.0 billion surplus.

Instead, reminiscent of requests for taxpayer bailouts from irresponsible Wall Street firms, some government officials and others are calling for tax increases.

Governor Parkinson says further spending reductions simply are not possible. With all due respect, such claims are hard to believe absent confirmation by truly independent analysis. (If you would like to do your own analysis, the complete state check register, state payroll information and retiree benefits are now online at www.KansasOpenGov.org.)

Regardless, we can work through the existing crisis without cutting essential services or increasing taxes. This fiscal year began with over a billion dollars in unencumbered carryover cash reserves in state agency accounts. Some of that money might not be available but we only need a portion of it right now. Since most balances have been growing annually and the necessary ending balances have not been determined, we can probably find what we need to avoid tax increases or service cuts.

Excessive spending is to blame for the current budget crisis and it is wrong to ask taxpayers for a bailout. It’s also unnecessary; the state should use a portion of the carryover cash reserves being held by state agencies to get through the immediate problem and implement a full independent review of state spending in search of ways to provide good services at lower costs.

Now tell us what you think. Send your comments to information@kansaspolicy.org.

3 Comments

  • The answer is very simple FOLLOW TEXAS’S EXAMPLE.
    They’re State legislature only meets for 60 days every other year. I know I am not the only one out there that breathes a sigh of relief when Congress goes on break, or is deadlocked, or when the City council doesn’t have a meeting. At least we know we’re safe from some new special interest project they want to throw tax money at, or new regulation to bog down business. Don’t quote me but I read some place that 70% of all new jobs created in the Bush years were created in Texas, simply because of the tax system (no State income tax, no state Corp taxes), and less regulation because special interests have less access to legislators.

  • This budget information is long overdue. I wish this type of add had been published in 2009! We cannot continue the spend and tax policies that have repeatedly and regularly raised Kansas tax–with the property taxes annual appraisal increase being the number 1 revenue raiser followed closely by the accelerated growth in income tax revenues due to bracket creep caused by inflation.

    The Kansas Policy Institute deserves kudos for bringing the rest of the story to kansans. Soaring spending by “moderates” i.e. lefties in the legislature from both political parties have driven state spending growth and this is now a big part of our predicament. When you add the fiscal mess caused by Washington’s disastrous housing policies (Freddie & Fannie) providing a foundation for financial shenanigans on Wall St. to the big Democratic tax hike that will begin Jan. 1, 2011 when the Bush tax cuts disappear, we will face some tough economic challenges ahead of us as a state and a nation in 2010.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Posts

%d bloggers like this: